Mealey's Securities

  • October 20, 2020

    Security Tech Company Hit With Investor Suit Over Testing Program Nondisclosures

    LOS ANGELES — A security technology company and certain of its current and former executive officers violated federal securities law when they failed to disclose to investors that the Los Angeles Police Department’s (LAPD) pilot testing program for the company’s remote restraint device showed limited utility, thereby allowing the company’s stock to trade at an artificially high rate, a shareholder alleges in an Oct. 15 complaint filed in California federal court (Paula Early v. Wrap Technologies Inc., et al., No. 20-9444, C.D. Calif.).

  • October 16, 2020

    Graft Maker Shareholder Derivative Suit Settlement Gains Preliminary Approval

    ATLANTA — A federal judge in Georgia on Oct. 8 granted preliminary approval of a proposed settlement agreement in a shareholder derivative lawsuit brought on behalf of tissue graft maker MiMedx Group Inc. against several of the biopharmaceutical company’s current and former executive officers and directors that alleged that the defendants breached their fiduciary duty by covering up whistleblower allegations of a massive “channel-stuffing” scheme (In re MiMedx Group Inc. Shareholder Derivative Litigation, No. 18-4486, N.D. Ga.).

  • October 16, 2020

    Royal Caribbean Latest Cruise Line Hit With COVID-Related Shareholder Suit

    MIAMI — Royal Caribbean Cruises Ltd. and certain of its senior executives violated federal securities law by failing to disclose that the cruise line had been experiencing a decrease in bookings for cruises outside of China in the wake of the novel coronavirus outbreak and that the company lacked adequate policies and procedures to combat the spread of COVID-19 on its ships, a shareholder alleges in an Oct. 7 complaint filed in Florida federal court (City of Riviera Beach General Employees Retirement System v. Royal Caribbean Cruises Ltd., et al., No. 20-24111, S.D. Fla.).

  • October 15, 2020

    Shareholders Ask 3rd Circuit To Deny Mandamus Petition In 3M Stock-Drop Suit

    PHILADELPHIA — The Third Circuit U.S. Court of Appeals should deny a petition for writ of mandamus filed by the 3M Co. and certain of its current and former executive officers in an investor class action claiming that the defendants concealed the truth about the company’s exposure to liability associated with per- and polyfluoroalkyl substances (PFAS) in violation of federal securities laws because a federal district court committed no clear error in denying the petitioners’ request to transfer the action to Minnesota federal court, shareholders argue in an Oct. 13 response brief (In re 3M Co., et al., No. 20-2864, 3rd Cir.).

  • October 15, 2020

    Appellant Failed To Exhaust Exchange Act’s Administrative Remedies, Panel Rules

    CINCINNATI — A licensed securities professional failed to exhaust all administrative remedies under the Securities Exchange Act of 1934 when he filed a state court lawsuit against the Financial Industry Regulatory Authority (FINRA) and others seeking damages for sanctions ordered against him, and, as a result, a federal district court did not err in dismissing his action for lack of jurisdiction, a Sixth Circuit U.S. Court of Appeals panel ruled Oct. 14 in what it deemed an issue of first impression in the Circuit Court (Jeffrey Allen Mohlman v. Financial Industry Regulatory Authority, et al., No. 20-3257, 6th Cir., 2020 U.S. App. LEXIS 32395).

  • October 15, 2020

    9th Circuit Finds $75,000 Insider Trading Civil Penalty To Be Within Reason

    SAN FRANCISCO — A federal district court’s imposition of a $75,000 civil penalty against a supply chain services company’s former employee for his admitted insider trading in violation of federal securities law was reasonable in light of the appellant’s involvement in the scheme, a Ninth Circuit U.S. Court of Appeals panel ruled Oct. 13 (U.S. Securities and Exchange Commission v. Robert M. Morano, No. 18-386, 9th Cir., 2020 U.S. App. LEXIS 32231).

  • October 14, 2020

    3rd Circuit Denies Investors’ Bid To Reopen Hertz Global Shareholder Action

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on Oct. 13 ruled that a federal district court correctly deemed a bid by shareholders to reopen a securities class action lawsuit against bankrupt car rental company Hertz Global Holdings Inc. and certain of its senior executives and file an amended complaint based on newly discovered evidence as untimely because the evidence the pension funds sought to add was in existence before the district court’s dismissal ruling (In re Hertz Global Holdings Inc. Securities Litigation, No. 19-3532, 3rd Cir., 2020 U.S. App. LEXIS 32238).

  • October 14, 2020

    Panel: Grinnell Factors Aptly Considered In Deeming Securities Settlement Fair

    NEW YORK — A federal district court did not abuse its discretion in granting final approval to a $6.5 million settlement in a securities class action lawsuit because the court properly considered each of the nine factors established in City of Detroit v. Grinnell Corp. before determining that the proposed settlement agreement was fair, reasonable and adequate, a Second Circuit U.S. Court of Appeals panel ruled Oct. 2 (Aric McIntire, et al. v. ODS Capital LLC, et al., No. 19-3748, 2nd Cir., 2020 U.S. Dist. LEXIS 31434).

  • October 14, 2020

    Judge Unpersuaded By Reconsideration Arguments In Philip Morris Stock-Drop Suit

    NEW YORK — A federal judge in New York on Sept. 21 ruled that lead plaintiffs in a securities class action lawsuit against tobacco company Philip Morris International Inc. and several of its senior executives have failed to sufficiently establish circumstances that would warrant her to reconsider her earlier ruling granting the defendants’ motion to dismiss claims that they misrepresented both clinical study results for an e-cigarette product Philip Morris manufactured and the product’s financial performance in Japan  (In re Philip Morris International Inc. Securities Litigation, No. 18-8049, S.D. N.Y., 2020 U.S. Dist. LEXIS 172552).

  • October 13, 2020

    Stanford Investors Cannot Retain Fraudulent Transfers, 5th Circuit Panel Rules

    NEW ORLEANS — Based on guidance from the Texas Supreme Court, a Fifth Circuit U.S. Court of Appeals panel on Oct. 8 upheld a previous determination that the Texas Uniform Fraudulent Transfer Act’s (TUFTA) good faith affirmative defense does not allow investors in the Stanford International Bank (SIB) Ponzi scheme to retain fraudulent transfers they received while on inquiry notice of the scheme (Ralph S. Janvey v. GMAG LLC, et al., No. 17-11526, 5th Cir., 2020 U.S. App. LEXIS 32032).

  • October 09, 2020

    Panel Overturns Grant Of New Criminal Trial Over Bond Issuance Scheme

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on Oct. 7 ruled that a federal judge in New York erred in granting a defendant’s motion for a new trial in a criminal action stemming from an illegal bond issuance scheme because the evidence presented at trial did not “preponderate heavily against the jury’s verdict” convicting the defendant on charges of conspiracy to commit securities fraud and securities fraud (United States of America v. Devon Archer, No. 18-3727, 2nd Cir., 2020 U.S. App. LEXIS 31773).

  • October 09, 2020

    Judge Approves Voluntary Dismissal Of Securities Case Against Fracking Operator

    HOUSTON — A federal judge in Texas on Oct. 7 approved a shareholder’s voluntary dismissal of his securities fraud lawsuit against a hydraulic fracturing operator after none of the defendants filed an answer to the complaint or moved for summary judgment (John Gordon Windler v. Cabot Oil & Gas Corporation, et al., No. 20-2827, S.D. Texas).

  • October 09, 2020

    Alphabet Settles Sexual Harassment Derivative Suit, Establishes $310M Fund

    SAN JOSE, Calif. — Google parent company Alphabet Inc. will pay $310 million to fund certain diversity, equity and inclusion (DEI) initiatives as part of a settlement with investors in a shareholder derivative lawsuit that alleged that several current and former Alphabet senior executives and directors breached their fiduciary duty by failing to act on allegations of sexual harassment and a massive personal data breach, according to a motion for preliminary approval of the settlement filed Sept. 25 in California state court (In re Alphabet Inc. Shareholder Derivative Litigation, No. 19CV341522, Calif. Super., Santa Clara Co.).

  • October 09, 2020

    Biotech Firm Hit With COVID-Related Derivative Suit Over Warrant Revisions

    SAN FRANCISCO — An investor sued a biotechnology company’s board of directors and a hedge fund in California federal court on Sept. 17, alleging that the defendants breached their fiduciary duty by illegally spring-loading warrants and stock option agreements that allowed the hedge fund and the company’s CEO reap massive profits after the company announced that it had been selected to take part in the U.S. Department of Health and Human Services’ Operation Warp Speed (OWS) program (David Stachowski v. Steven J. Boyd, et al. No. 20-6525, N.D. Calif.).

  • October 09, 2020

    Panel: Relevant Factors Considered In Facebook IPO Suit Settlement Approval

    NEW YORK — A federal district court did not err in rejecting a Facebook Inc. shareholder’s objections to a $35 million settlement in a securities class action lawsuit stemming from the company’s initial public offering (IPO) because class representatives acted within their discretion in not bringing federal securities law claims against one of the underwriters associated with the IPO, a Second Circuit U.S. Court of Appeals panel ruled Sept. 23 (In re Facebook Inc. IPO Class Action Settlement, No. 18-3845, 2nd Cir., 2020 U.S. App. LEXIS 30611).

  • October 07, 2020

    Panel Upholds District Court's Attorney Fee Award In Shareholder Action

    NEW YORK — A federal district court did not abuse its discretion in awarding only a portion of the attorney fees sought by an objector to a $3 billion securities class action settlement with Brazilian oil company Petróleo Brasileiro S.A. (Petrobras) and others because it correctly determined the appellant's objections to the shareholders' attorney fees request post-settlement to be distinct, a Second Circuit U.S. Court of Appeals panel ruled Oct. 2 (In re:  Petrobras Securities Litigation [William Thomas Haynes v. Universities Superannuation Scheme Limited, et al.], No. 19-3531, 2nd Cir., 2020 U.S. App. LEXIS 31431).

  • October 02, 2020

    Dismissal Of Securities Class Action Over CEO's Alleged Sexual Misconduct Stands

    NEW YORK — A federal district court did not err in dismissing a pension plan's consolidated amended securities class action complaint against a tax preparation services provider and two of its former senior executives stemming from the company's former CEO's sexual and personal misconduct without leave to amend because the pension plan failed to plead any sufficient material misrepresentations in making its federal securities law claims, a Second Circuit U.S. Court of Appeals panel ruled Sept. 30 in a summary order (In re Liberty Tax Inc. Securities Litigation, No. 20-652, 2nd Cir.).

  • September 28, 2020

    Executive's Bond Is Reduced Pending Appeal Over New Trial For Alleged Securities Fraud

    BROOKLYN, N.Y. — In a Sept. 23 docket entry, a New York federal judge reduced a former Platinum Partners executive's bond and removed domestic travel restrictions against him as the government appeals the judge's decision to grant a new trial over allegations of securities fraud in schemes to transfer Platinum Partners' assets to a reinsurance company and related entities to defraud bondholders in an oil and gas company (United States v. Mark Nordlicht, 16-cr-640, E.D. N.Y.).

  • September 22, 2020

    Monster Energy Hit With Board Diversity Shareholder Derivative Lawsuit

    SANTA ANA, Calif. — An investor filed a shareholder derivative action against several senior executives and members of the board of directors of energy drink maker Monster Beverage Corp. on Sept. 18 in California federal court, alleging that the defendants breached their fiduciary duty and violated federal securities laws by failing to appoint any people of color or minorities to senior leadership positions within the company (Frank Falat v. Rodney C. Sacks, et al., No. 20-1782, C.D. Calif.).

  • September 18, 2020

    Judge Dismisses Suit Against JPMorgan Over Reinsurance Investment

    CHICAGO — An Illinois federal judge on Sept. 16 dismissed a negligent misrepresentation and breach of fiduciary duty suit against JPMorgan Chase Bank N.A. and its related entities because clients of the bank failed to show how JPMorgan negligently failed to disclose that a reinsurance business "did not believe it would be profitable early on" (Green Dolphin Capital LLC, et al. v. JPMorgan Chase Bank, N.A., et al., No. 19-6940, N.D. Ill., 2020 U.S. Dist. LEXIS 169822).